I have always loved Boston. My first recollection of the city was when my parents and I used to fly into it spend a night, or two, and then head for our house in Nantucket. Boy, I wish I still had that house. In later life we use to visit the city to see portfolio managers with Fidelity of particular interest.
Psychology is the reason most investors fail to keep up with the markets, and why contrarian strategies have turned in consistently superior performance over time. This same inability to understand psychology is often why academics don’t incorporate its use and instead stay with what may be flawed modern portfolio theory.
Our work suggests there is still a chance for the S&P 500 (SPX/2992.07) to trade out to new all-time highs (ATHs). However, the first part of October is showing up as problematic on a trading basis and potentially before then. Well, “potentially before then” began yesterday with the revelation that Speaker Nancy Pelosi was proceeding with a formal impeachment inquiry against President Trump.
Frederic ‘Shad’ Rowe
I have been reading Shad Rowe’s prose since the 1970s when he wrote a column for Forbes’s magazine. More recently Shad and I met in his Dallas office to discuss the markets, stocks and his investment style. That was about six or seven years ago.
Zebras have the same problem as institutional portfolio managers. First, both seek profits. For portfolio managers, above average performance; for zebras, fresh grass. Secondly, both dislike risk. Portfolio managers can get fired; zebras can get eaten by lions. Third, both move in herds.
Desperately Seeking Savings
Desperately Seeking Susan is a 1985 American comedy-drama film. We recalled the movie, and its title, while talking to a 70-year-old contemporary who told us that in this low interest rate environment he is, “Desperately seeking savings.”
Never Say Never
We were surprised by last Friday’s stock market action. Of course, we did not anticipate the escalation of tariffs, or the Tweet Triage. Friday’s plunge was the forth test of the August lows between 2822 and 2835. To us this looks like a search for a bottom, yet Friday’s drop is a bit concerning.
Last week on CNBC I stated that maybe what we have is a new toolbox; but nobody knows what new tool to use for analyzing the economy, stock market, bond market, etc. Our friend, CNBC’s uber-smart Steve Liesman, hinted at this point in our interview, but I do not think many folks picked up on it, and it is a very important point.
What I really think has happened is that given the years of quantitative easing, exceptionally low interest rates, low inflation, etc. what we have is a new “toolbox” and we do not know what “tools” to use in quantifying the current economic, bond market, and stock market environments.
The Day the Earth Stood Still
Have we changed? Have circumstances changed? Our answer was, “Maybe.” With what the PBOC did in basically resetting the U.S. Dollar/ Renminbi exchange rate, it suggests the trade war is going to go on for a lot longer than most anticipated, including us.
Ich bin ein Berliner
"Ich bin ein Berliner" (German pronunciation: [ˈʔɪç ˈbɪn ʔaɪn bɛɐ̯ˈliːnɐ], "I am a Berliner") is a well-known quote from a speech by United States President John F. Kennedy given on June 26, 1963, in West Berlin. It is widely regarded as the best-known speech of the Cold War and the most famous anti-communist speech.
Edward O. Thorp
I was talking to my friend, and 60-year stock market veteran, Jim Rivenes (Raymond James) last week and somehow, we got on the subject about Edward Thorp an individual Jim use to have as a client. It reminded me of a report I wrote in 2005. I like this report.
Technical Analysis 101
I entered this business in 1971 on a trading desk in New York city. Since then I have been a trade desk manager, a retail stock broker, branch manager, analyst, portfolio manager, Director of Research at five different firms, and head of Capital Markets at three firms. As such, I used to do reviews on the analysts.
Random Gleanings on a Flight to Montréal
Greetings from Montréal one of my favorite cities in the World. The climes here are cooler than in Florida and the weather is perfect, which is a nice respite from Florida’s heat and humidity. I am here to see some institutional accounts and speak at an event in one of my favorite restaurants on Peel Street...
The Big Chill, Stall
This morning, however, we changed the name from The Big Chill to The Big Stall because on June 3, 2019 we issued a “Trading Flash” stating that we though a trading bottom was being formed. At the time the S&P 500 (SPX/2886.98) was trading at ~2729. Four sessions later, Thursday 6-6-19, the SPX was changing hands at 2852 and we scribed another “Trading Flash.”
New York, New York
Last week CWP’s founder and CEO, namely Kevin Simpson, accompanied me to my various haunts in New York City to meet some folks and do media “hits.” I will not bore you with the events of the entire week, but I will share with you what a typical day looked like.
I turn to “Page Two” of my career after a wonderful experience at the venerable firm of Raymond James. I hope I have left Raymond James on the high road because I cannot tell you how much I appreciate the opportunities Tom James, and the firm, have afforded me over the last 20+ years, but it was time to move on.
Sitting in Limbo
Clearly I have been “sitting here in limbo” for the last few weeks relaxing in Key West, which is a profoundly different planet. I love it! We stayed at Casa Marina, a resort I would highly recommend to anyone. So while I was limbo, it would seem as though the stock market was in limbo, as well.
Economics or Philosophy
As I wrote on Friday, the weak economic outlook from the ECB, continuing reduced earnings estimates, worries about the Mueller Report, renewed Chinese trade war tensions, and the underperformance of the cyclical sectors bringing on cries of recession all proved too much for stocks...
Sacagawea lived from May 1788 to December 1812. She was a Lemhi Shoshone woman who is best known for her help guiding the Lewis and Clark Expedition in achieving their mission objectives by exploring thousands of miles from North Dakota to the Pacific Ocean.
National Treasure, National Treasury, National Debt
I was traveling last week seeing portfolio managers and doing gigs for our financial advisors and their clients. I have been doing such events for much of the past six months. The recurring question from clients is, “What about the national debt?”
Who Do You Trust?
We revisit this “Who do you trust” meme this morning because of what I have been saying the past few weeks. After identifying the selling climax low of December 24, when 48.5% of stocks made new lows, I recorded two 90% upside days (90% of volume and upticks came on the upside).
So, I need to apologize to everyone for not being able to do a verbal recorded call last week, or write a missive the last three sessions of the week. The problem was that while in NYC my media events began around 6:00 a.m., followed by more media events, then it was portfolio manager meetings.
"Time is Archimedes’ Lever in Investing - Archimedes is often quoted as saying, 'Give me a lever long enough and I can move the earth.' In investing, that lever is time. The length of time investments will be held, the period of time over which investment results will be measured and judged, is the single most powerful factor in any investment program.
My Baby Wrote Me a Letter
Recently, our email box has been filled up with questions like this one from one particularly bright Raymond James financial advisor, namely, Michael McCormick of the venerable Chicago-based money management firm of McCormick Retirement Group, who wrote, and we responded...
Certainty vs. Growth
Looking around, we don’t see many people who used to be in this business. Maybe they just couldn’t take being wrong. Or, maybe their clients couldn’t take their claiming they were always right. Or, maybe they got tired of issuing lots of predictions while, at the same time, watching the stock market going nowhere this year.
Perception vs. Reality
For years we have quoted Benjamin Graham’s book The Intelligent Investor, which Warren Buffet has said is the best book ever written on investing. The operative quote from said book is “The essence of portfolio management is the management of risks, not the management of returns.” He closes that thought by saying, “All good portfolio management begins, and ends, with this premise.”
We could almost hear our history professor espousing Hoffer’s works recently when we were asked by a particularly smart media type if trust and character would really command a “premium” price earnings (P/E) ratio in today’s environment? Our response was “of course,” and as an example we offered up a quote from John Pierpont Morgan...